2020 will quite obviously be catalogued as the year of Covid-19. In addition to the downward deflections of most of the parameters by which business and individuals operated – as the data from Q2 is coming in, we find that there was a lot which was moved sideways into new territory as well.
There has been an unfortunate equanimity in the adverse impacts on all nations in terms of recession, inflation, unemployment, cascading crises in the healthcare sector and primarily, in the manufacturing and unavailability of essential goods and services. Though this has eased relatively since the chokehold of the Q1, this still holds true when compared to the same time in 2019.
But one constant throughout has been the consumption of finished goods. And since retail is expected to grow 2.0% to $5.574 trillion and e-commerce sales expected to grow 12.8% to $666.28 billion, it’s clear that there is still a high degree of buying going on. What has changed however is the consumer buying behaviour- what we are buying and how we are buying it. Specifically, e-retail, and the rise of the homebound market.
There are then two perspectives to look at the changing consumer buying behaviour. From the standpoint of what they are expected to do, and what companies should do to stay profitable and relevant.
Generationally the Baby Boomers have in particular been pushed down the aisle to limited income. Also, by owing to a stripped-down lifestyle, owing to being locked down and the unavailability of Brick and Mortar establishments, the bulk of household costs has been in line with maximizing the individual’s ROI i.e., return on investment, no matter what the return may be- social, educational, financial or simple convenience. Based on this change in consumer buying behaviour has come up the conclusion that the industries which are going to grow economically in 2020 as well as in the coming years are the health and hygiene, electronics and communication, local foods retail and the entertainment industry. A renewed interest in physical well-being has also translated into record sales for fitness equipment and media, usage of immunity boosters and the consumption of natural medicines like turmeric, honey, etc. For instance, according to Nielsen Holdings PLC, sales of Dabur Chyawanprash grew 283% in June 2020 and Dabur honey’s sales grew to 39%. According to Dabur India, Chyawanprash sales have increased 7 times from April 2020 to June 2020.
‘Work from Home’ is the new set of tyres on which the public and the private sectors are running their vehicles of operation, and this has enormously raised the demands for laptops. According to the International Data Corporation (IDC), worldwide personal computer shipments grew by 11.2%. It has been reported that the HP laptops are selling the most followed by Lenovo and Dell. According to Flipkart, the overall search for laptop has doubled since March with the best functioning laptop being searched the most.
The inability to access hospitality, live media and tourist experiences have led to a doubling down of already high growth sectors like OTT platforms. Netflix, Amazon Prime, Spotify all saw double-digit jumps in subscription when compared to 2019, and higher than target realisations for Q2.
This leads to obvious projections of an increasingly crowded marketplace, with more intercessor platforms that tie in these disparate providers.
There has been a huge segment of the population in the pre-pandemic times which was reluctant to switch to e-commerce. Historically, India has proved to be more resistant to e-commerce solutions, especially when it comes to Grocery, Foodstuffs, Household Hygiene, and high consumption consumer goods. Though the economy is slated to “unlock” in the coming months, in time for the Diwali rush, the increased traffic to Omniretailers like Amazon and e-commerce platforms that are brand specific are likely to continue long after the lockdowns are called off, as people would still be apprehensive to visit crowded areas like malls or supermarkets. Further logistics movers in Metropolitan cities have seen an average jump of 8% in volumes when compared to 2019, despite a drop of almost 15% in contracts. Which means the Indian consumer buying behaviour is getting more of what they need from the increasingly few platforms that can still stock their shelves.
According to a survey by NRF, more than 50% of consumers have ordered products online that they would normally go to stores to purchase suggesting the future of online shopping.
Another knock-on the consequence of this shift is that once the consumers get a taste of the convenience that E-Commerce brings, they may cross the cultural roadblock that prohibited shopping online to give new future of online shopping.
Traditional brick and mortar dependent retailers are seeing forced closures, layoffs and declining revenue.
The direct-to-consumer business model which cuts the retailers out and links brands directly to their customers via the platforms of the internet, by extension can expect to thrive. For example, PepsiCo burgeoning with Snacks.com. Despite the fact that it sounds simple, easy and cost-efficient, it exposes the brand to the question of building online infrastructure which cannot be addressed by small and medium enterprises. So, the leaders of this ‘new world order’ would be those agile retailers who will upgrade to omnichannel ecosystems and will keep introducing innovative shopping experiences by analyzing the new buying behaviour. They will be closely followed by the survivors who have their own e-store and sell their products/services on major online platforms.
A majority of retailers expect festive season business to be down by 25% due to the impact of the pandemic. Some of the retailers are even considering to cancel or to defer the orders due to reduced festive forecasts as mentioned by the survey reports of BluePi Consulting. Given that festival season sales account for a significant portion of sales book each year, a downturn in the festival season sales would mean a longer road to recovery. Commenting on the findings of the report, BluePi Consulting CEO PronamChatterjee said, “The market sentiment has taken a downturn from being optimistic to border-line negative due to the COVID proliferation beyond initial estimates and there is no end in sight.”
The first time buyers of cars, as well as the additional car buyers, have increased to great numbers in the midst of the pandemic, as customers prefer personal mobility over public transport in order to follow the social-isolation protocols laid out by the government.
“First- time car buying is up and replacement buying is down, which means exchange is down. However, additional car buying is also up because of the functionality requirement,” Maruti Suzuki India Ltd Executive Director (Sales and Marketing) Shashank Srivastava told PTI.
On the festive season outlook, he said, “Since it is a discretionary purchase, it will depend a lot on how sentiments are. In festival times car buying generally increases because consumers have a bigger intention or inclination to spend money but sentiment this time is little unprecedented.”
Since the times are of staying indoors, the masses are spreading out their increased need of home appliances like dishwashers, washing machines, etc., in order to get their flow of life smooth. For instance, the laundry shops had been shut during the lockdown, even after the government allowed them to re-open, people are not willing to go to shops to avoid physical contacts, in turn, the spread of the virus, and this has increased the demands of white appliances. Brands are witnessing the impact of pent-up demands; LG is reported to have observed a surge in demand for its home appliance range.
It’s not the matter of just a nation, but the whole world has become highly uncertain and out of any promise that can be made, so laying out the future of retail and that of online shopping with 100% accuracy is not that easy; the only thing that can be relied upon is the individual psyche and the cultural values. Plus, most of the brands will have to go through a re-definition of their marketing books and communication strategies in order to win a foothold in the new ways of playing the game.